New Owner + New Franchise Concept = Bad Idea

Is your goal to make money or sound cool at the party?

It’s a terrible idea for someone new to franchising to open a brand-new concept from scratch.

Here’s why:

As a brand-new business owner, there’s a lot you don’t know

The Business Owner

You can read all the books in the world about running a business, but nothing compares to actually doing it

You will make mistakes:

  • You will hire the wrong people

  • You will have inefficient systems

  • You will spend money on marketing that doesn’t work

  • You will miss something, which results in the sheriff’s department showing up to auction off your waiting room furniture (ask me how I know)

You will learn from all of those mistakes.

  • You will improve

  • You will hire better people

  • Sales will grow

  • Profits will grow

  • The business will become easier to operate

A good franchise partner will help speed up your learning curve by giving you guidance & processes. However, they aren’t running your business - you are. There’s still plenty to learn.

The Franchise

Selecting the right franchise is the most significant decision you will make.

New brands are exciting, flashy & have blue-sky growth opportunities. Old brands are boring, tired & saturated.

Here are the downsides to new franchise brands that the slick sales rep won’t tell you:

  • No track record - maybe they’ve been around for 5 years total. They have not gone through multiple economic cycles like a 25+ year old brand.

  • No franchise experience - many new concepts are extensions of a successful business operator. Being a franchisor is an entirely different animal than owning a business

  • No brand awareness - you may be obsessed with the brand, but the average consumer has no idea. It will take a lot of marketing & time to build brand awareness

  • No sales - you’ll get pitched on how long it takes over franchisees to build the sales, but there’s no guarantee you will grow at the same speed. The business could lose money for 12 to 24 months before sales reach a profitable level

  • No team - you have to build out the team. Hiring is like turning over playing cards. You go through many 2, 3, and 4’s until you find the Q, K, & Aces.

Compare this to acquiring an existing legacy franchise location

  • Day 1, you still start with sales, a team in place, market share & being part of a brand that has a track record of success

  • Legacy brands have legacy owners who are probably a little out of touch. You come in with new energy, ideas & technology, giving the business a boost

Those small changes increase sales and cash flow, giving you an instant return on your investment. There’s no waiting 12 to 24 months to start making money

The Goal

Why are you buying a franchise? To sound cool at a party or make a boatload of money?

It’s probably way more fun to talk about a trendy new rock-n-roll boxing gym than a mold remediation business.

If buying a franchise is a lifestyle decision then pick whatever you like. If purchasing a franchise to make a boatload of money, then let’s weigh the risk vs. reward ratio.

As a brand new business owner, what do you think is a better combination:

No business experience + No brand awareness + No franchisor experience + No sales + No team


No business experience + High brand awareness + Decades of franchisor experience + Sales from day 1 + Existing team in place

Learn how to run a business with the support of a solid foundation. Once you’ve built a solid business, look at opening a new concept — if you must.

Or continue acquiring as many existing units as possible from legacy owners.

I write about business acquisitions, operations, franchising & investing.

Business with Beers

Every week on my podcast, I bring you the stories of entrepreneurs about building their business, wealth & passive income.